Suncoke Energy, Inc. · NYSE:SXC
Suncoke Energy — Q2 2012 Earnings Presentation
27 slides from Suncoke Energy's earnings presentation, Jul 26, 2012
Slide 1: Q2 2012 Earnings Conference Call
Q2 2012 Earnings Conference Call July 26, 2012
Slide 2: Safe Harbor Statement
Safe Harbor Statement This slide presentation should be reviewed in conjunction with SunCoke’s Second Quarter 2012 earnings release and conference call held on July 26, 2012 at 10:00 a.m. ET. Some of the information included in this presentation contains “forward-looking statements” (as defined in S
Slide 3: Q2 2012 Earnings Overview
Q2 2012 Earnings Overview Earnings Per Share (diluted) Q2 2012 results of $0.32 per share driven by strong Coke performance $0.32 $0.32 • Middletown startup has been a success $0.24 • Continued improvement at Indiana $0.17 Harbor • Strong operations at other facilities Coal action plan progressing 2
Slide 4: MLP Update
MLP Update • Board approved formation of MLP • Expected Assets/Structure – A portion of our interests in Haverhill and Middletown – SXC to own General Partner, incentive distribution rights and a portion of the partnership units Haverhill Operations • Proceeds to SXC – Expected uses will include pay
Slide 5: Q2 2012 Financial Results
Q2 2012 Financial Results Revenue up 22% ($ in millions) Q2'12 Q2'11 Change • Middletown sold 146 thousand tons; Domestic Coke Sales Volumes 1,074 927 147 added $72.0 million to revenue • Higher average coal prices benefited Coal Sales Volumes 365 334 31 both Coke and Coal revenues Revenue $ 460.9 $
Slide 6: Adjusted EBITDA Bridge – Q2 2011 to Q2 2012
Adjusted EBITDA(1) Bridge – Q2 2011 to Q2 2012 Quarter’s performance led by strong Coke business results ($ in millions) ($2.2) $1.2 $4.9 $4.8 $5.1 $14.0 Total improvement of $6.3 million $65.5 $37.7 Q2 2011 Middletown Indiana Indiana Coke Business Coal Mining Corporate Q2 2012 Adjusted Harbor Harbo
Slide 7: EPS Bridge – Q2 2011 to Q2 2012
EPS Bridge – Q2 2011 to Q2 2012 EPS reflects strength of cokemaking business offset by financing costs for standalone capital structure ($0.03) $0.06 ($0.08) $0.35 ($0.23) ($0.07) Reflects: Q2 2012 interest expense: $12.0m Q2 2011 interest income from affiliate: $5.7m $0.32 $0.32 Q2 2011 EPS Adjuste
Slide 8: Domestic Coke Business Summary
Domestic Coke Business Summary (Jewell Coke & Other Domestic Coke) Strong quarter for domestic coke profitability driven by Middletown, Indiana Harbor and other operations Domestic Coke Production Domestic Coke Adjusted EBITDA(1) Per Ton (Tons in thousands) $90 ($ in millions, except per ton amounts
Slide 9: Domestic Coke Business Outlook
Domestic Coke Business Outlook • Expect domestic coke Adjusted EBITDA(1) per ton to be $55 - $60 for balance of 2012 • Based on current sentiment, 2012 coke sales volume expected to be in middle of range Estimated Estimated ($ in millions, except as noted) Low High Domestic Coke Adjusted EBITDA(1) P
Slide 10: Pretax Return on Invested Capital (ROIC)
Pretax Return on Invested Capital (ROIC) Pretax ROIC(1) for Domestic Coke excluding Middletown prior to 2012 (2) 30.0% 25.0% 23% 20% 20.0% (4) 17% 15% (3) 15.0% 12% (3) 13% 10.0% 5.0% 2% 0.0% Q1 2011 Q2 2011 Q3 2011 Q4 2011 2011 Q1 2012 Q2 2012 Pretax ROIC, ex-Middletown prior 2012 (1)(2) Q1 2011 Q2
Slide 11: Coal Mining Financial Summary
Coal Mining Financial Summary (1) Coal Mining Adjusted EBITDA(1) and Avg. Sales Q2 2012 Adjusted EBITDA declined YoY to Price/Ton(2) ($ in millions, except per ton amounts) $9.3 million • Pricing up modestly, reflecting strong mid-vol. $200 $162 $171 $167 $155 $159 pricing/volumes, offset by weak $1
Slide 12: Q2 2012 Sources & Uses of Cash
Q2 2012 Sources & Uses of Cash Liquidity position and credit metrics improving; free cash flow(1) was $66 million in first half 2012 ($ in millions) ($0.1) ($11.2) ($2.2) $40.1 $5.6 $20.2 $24.0 Primary changes vs. Q1 2012: Accounts receivable: +$24.8m $190.0 Accrued liabilities: +$9.9m Interest paya
Slide 13: Strategies for Enhancing Shareholder Value
Strategies for Enhancing Shareholder Value Operational Grow The Coke Strategically Optimize Excellence Business Assets • Maintain focus on details • Domestic • Coke MLP and discipline of coke and • Continue permitting • Execute plan to place a coal mining operations efforts for next potential portio
Slide 14: Updated 2012 Guidance
Updated 2012 Guidance Metric Expected 2012 Outlook Adjusted EBITDA (1) $250 million – $280 million EPS* (at 22% tax rate) $1.30 – $1.65 Capital Expenditures & Approximately $85 million Investments Free Cash Flow (2) $100 million + Cash Tax Rate 10% – 15% Effective Tax Rate 20% – 24% Corporate Costs
Slide 15: Questions
Questions SunCoke Energy The Higher Degree
Slide 16: Appendix
Appendix SunCoke Energy The Higher Degree
Slide 17: Definitions
Definitions • Adjusted EBITDA represents earnings before interest, taxes, depreciation, depletion and amortization (“EBITDA”) adjusted for sales discounts and the deduction of income attributable to non-controlling interests in our Indiana Harbor cokemaking operations. EBITDA reflects sales discount
Slide 18: Reconciliations
Reconciliations Reconciliations from Adjusted Operating Income and Adjusted EBITDA to Net Income $ in millions Q2 2012 Q1 2012 FY 2011 Q4 2011 Q3 2011 Q2 2011 Q1 2011 FY 2010 Adjusted Pro Forma Operating Income 151.5 Add: Pro Forma impact of ArcelorMittal settlement 51.0 Subtract: Legal and settleme
Slide 19: Reconciliations
Reconciliations Reconciliations from Adjusted EBITDA to Adjusted Pre-Tax Operating Income Other Domestic International Domestic $ in millions, except per ton data Jewell Coke Coke Coke Jewell Coal Corporate Combined Coke Q2 2012 Adjusted EBITDA 12.5 48.6 0.7 9.3 (5.6) 65.5 61.1 Subtract: Depreciatio
Slide 20: Reconciliations
Reconciliations Reconciliations from Adjusted EBITDA to Adjusted Pre-Tax Operating Income Other Domestic International Domestic $ in millions, except per ton data Jewell Coke Coke Coke Jewell Coal Corporate Combined Coke FY 2011 Adjusted EBITDA 46.1 89.4 13.7 35.5 (44.2) 140.5 135.5 Subtract: Deprec
Slide 21: Reconciliations
Reconciliations Reconciliations from Adjusted EBITDA to Adjusted Pre-Tax Operating Income Other Domestic International Domestic $ in millions, except per ton data Jewell Coke Coke Coke Jewell Coal Corporate Combined Coke Q3 2011 Adjusted EBITDA 13.9 34.3 1.7 9.2 (14.3) 44.8 48.2 Subtract: Depreciati
Slide 22: Reconciliations
Reconciliations Reconciliations from Adjusted EBITDA to Adjusted Pre-Tax Operating Income Other Domestic International Domestic $ in millions, except per ton data Jewell Coke Coke Coke Jewell Coal Corporate Combined Coke Q1 2011 Adjusted EBITDA 11.0 8.5 1.0 12.3 (6.2) 26.6 19.5 Subtract: Depreciatio
Slide 23: Pretax Return on Invested Capital Reconciliation, $MM
Pretax Return on Invested Capital Reconciliation, $MM Consolidated Sun Coke Energy Q2 2012 Q1 2012 2011 Q4 2011 Q3 2011 Q2 2011 Q1 2011 2010 Adjusted Pre-Tax Operating Income (1) 46.6 37.1 80.4 14.9 33.5 24.6 7.4 151.5 Invested Capital Q1 2012(2) Q1 2012(2) 2011 Q4 2011 Q3 2011 Q2 2011 Q1 2011 2010
Slide 24: Pretax Return on Invested Capital Reconciliation
Pretax Return on Invested Capital Reconciliation Jewell Other International Coal Corporate Period ended Coke Domestic Coke Coke Mining and Other Total Identifiable Assets for Allocating Invested Capital Q2 2012 81.4 1,458.4 53.9 193.0 183.5 1,970.2 Q1 2012 83.9 1,440.2 64.6 189.1 141.1 1,918.9 Q4 20
Slide 25: Estimated EBITDA Reconciliation
Estimated EBITDA Reconciliation 2012E Net Income to Adjusted EBITDA Reconciliation 2012E 2012E (in millions) Low High Net Income $98 $122 Depreciation, Depletion and Amortization 74 72 Total financing costs, net 48 46 Income tax expense 25 37 EBITDA $245 $277 Sales discounts 11 10 Noncontrolling int
Slide 26: Free Cash Flow Reconciliations
Free Cash Flow Reconciliations First Half 2012 Free Cash Flow Reconciliation 1st Half (in millions) 2012 Cash from operations $ 86.7 Less cash used for investing activities (20.7) Less payments to minority interest (-) Free Cash Flow $ 66.0 2012E Estimated Free Cash Flow Reconciliation (in millions)
Slide 27: Media releases and SEC filings are available on www.suncoke.com
Media releases and SEC filings are available on www.suncoke.com Investor Relations: 630-824-1907